The lights are out at the 1Time offices in Isando in Johannesburg’s East Rand. There’s no receptionist on duty and you can park in anyone’s parking spot.
It’s business unusual for the budget airline that went into provisional liquidation in November, leaving the airline with its wings clipped. But group CEO of 1Time Holdings Blacky Komani is trying not to flap and to keep his eyes on the horizon.
“It’s true I’m not sleeping at night, I keep thinking about what else I can do,” he says.
He’s sitting in the very boardroom seat where he made the decision to suspend all services that first Friday of November. He knows it was a Friday because the start of the weekend would be a critical factor in the perfect storm he says led to the airline being grounded.
“Once you’re in business rescue, which we were from August, you have to pay everything in cash and if it’s a weekend you have to pay for the whole weekend in advance. If you don’t have a proof of payment by 3PM on Friday for fuel and other expenses you’ll be grounded,” says Komani.
He says up until just 2PM that afternoon they were confident they’d make the deadline. Negotiations were looking good with UK-owned budget airline group Fastjet and creditors seemed likely to consent to a lifeline. But the storm got ugly, creditors baulked and Fastjet was sent scurrying.
At 2.23PM (he remembers the time exactly) he made the call for suspension of services, leaving hundreds of passengers stranded and his staff in tears and total shock.
“I didn’t believe it myself. I remember calling my wife, Pam, a little after we made the announcement. I phoned her but I couldn’t say the words ‘We’ve gone into liquidation’,” he says.
The 49-year-old from Kwelera, East London, had put up his Bryanston house as collateral when he, as one of six Mtha Aviation shareholders, went to the Industrial Development Bank (IDC) for a R49 million ($5.49 million) loan to buy a 25% share in 1Time. The deal went through in March 2011.
Komani, who lived in the States for 10 years, was in New York when the Twin Towers fell in the 9/11 tragedy. He says watching 1Time implode was like watching those towers crumble over 11 years ago. It was an emotional ground zero for him too. He shed tears publicly at the time and admits to being too overwrought to make media statements. He says he felt he let down his staff and members of public, who had come to trust the no-frills carrier.
“You feel so alone, like you’ve tried everything and it’s still not enough,” he says.
The abrupt halt to business could not have come at a worse time, just weeks before Christmas. This weighs heavy on Komani’s mind, and so too does the suicide of a pilot who was on 1Time’s payroll, just weeks after the airline was grounded.
It wasn’t supposed to turn out like this. For Komani entering into the airline industry meant merging his love for business and his passion for tourism. Giving travelers greater access to air travel across the continent had to be the next leap forward for tourism and business, he figured back in 2010.
But four factors created turbulence 1Time didn’t need.
“The World Cup didn’t deliver what we expected in terms of business opportunities. We acquired the maintenance facility Jetworx that came with its own problems. New player in the market Velvet Sky was taking a cut of passengers from us and when we’re talking about the low-cost arena, those last 10 passengers are what you need to stay in business. The final factor was that the oil price never dipped below $110 a barrel. Anything above that means you’re in a very tight position,” he says.
Critics—including trade union Solidarity, who had access to 1Time’s records during its period in business rescue—say 1Time was doomed with bad management practices. These included a glut of staff, especially at Jetworx, even when the airline was down to a fleet of seven aircraft; not clocking up enough flying hours a month; fat management incentive payouts when 1Time was floundering; and deficiencies in credit and cash flow management.
Komani doesn’t believe he fiddled while Rome burnt. He says they knew they were in trouble in May 2011. He says they started cutting costs and dropped three planes from their fleet of 10. Trimming the fat meant flattening their management structures, plugging leaks and stopping wastage and theft. They optimized flight schedules and Komani says he took a 10% salary cut and didn’t take bonuses.
“Ironically by October last year, just one month before we suspended flights, our records showed that the company had actually saved R30 million ($3.4 million) that year compared to the same figures from the previous year,” he says.
But it was too late. Even though they managed to sell Jetworx, saving around 250 jobs by February this year, liquidators were looking to divvy up the pie to creditors. Komani and his team’s big hope lies in UK-based Fastjet sealing the deal. Fastjet is the African version of Stelios Haji-Ioannou’s EasyJet venture in the UK. They will buy the company for R1 ($0.10) and inherit the R462 million ($52 million) debt. Fastjet’s designs are to broaden its pan-African flight route.
It’s a tricky deal. Fastjet, headquartered in Dar es Salaam, Tanzania, has been in dispute over unpaid leasing and maintenance bills to a Canadian aircraft leasing company. It’s also tangled up in an outstanding tax claim of around $2.4 million in the East African country.
Back in South Africa, the deal is still subject to the thumbs up by South African transport minister Ben Martins. 1Time will be hoping for a precedent-setting exemption to allow for more than 25% foreign ownership in a local airline to meet Fastjet’s majority shareholding aims. But other domestic airlines have objected to the application, saying it will erode the position of local aviation shareholders. A nod from the minister will give Fastjet international route rights without the company having to follow standard route license application processes, they say.
Komani sees it differently.
“I think the minister understands it’s an important decision around keeping the low-cost air travel model alive in South Africa, and also that there are over 540 jobs from the airline at stake,” he says.
Even if the deal comes through it could leave him out in the cold. He could be edged out as management structures are further pared down.
“I have a love of people and right now for me saving jobs is the most important box to tick. For me, I’ll come right one way or another.
“The lessons I learnt have been about implementing rescue measures early on and making sure they take effect as quickly as possible. Also that loyalty and leadership in tough times matters—anyone can be a good leader when things are going well,” he says.
Another worry on Komani’s mind is Skywise—brainchild of 1time founders Rodney James, Glenn Orsmond, Michael Kaminski, and Johan Bortslap, and more recently Wayne Duvenhage. The new budget airline is set to take to the skies in the second half of 2013, with three daily flights between Johannesburg and Cape Town and more destinations to follow. Skywise was granted an air service licence in March.
He may have lost his appetite for aviation right now but Komani’s trying to keep his focus and his sense of humor. So when asked the question: “Chicken of beef?” He says: “Right now, I think I’m on a diet”.